Question

A product sells for $30 per unit and has variable costs of $18 per unit. The fixed costs are $720,000. If the variable costs per unit were to decrease to $15 per unit, fixed costs increase to $900,000, and the selling price does not change, break-even point in units would:

Answer 1

remain the same

Step-by-step explanation:

Breakeven quantity are the number of units produced and sold at which net income is zero

Breakeven quantity = fixed cost / price – variable cost per unit

Initial Breakeven quantity = $720,000 / ($30 - $18) = 60,000

New Breakeven quantity = $900,000 / ($30 - $15) = 60,000

Breakeven point remained the same